74 S T A T. ]
PUBLIC LAW 8 6 - 7 7 9 - S E P T. 14, 1960
of such real estate investment trust for the taxable year (computed without regard to capital gains dividends) shall be reduced by the deduction provided by section 242 (relating to partially tax-exempt interest).
1007
^^ "'^^ ^42.
" (2) REAL ESTATE INVESTMENT TRUST TAXABLE INCOME.—For
purposes of this part, the term 'real estate investment trust taxable income' means the taxable income of the real estate investment trust, adjusted as follows: " (A) There shall be excluded the excess, if anyj of the net long-term capital gain over the net short-term capital loss. " (B) The deductions for corporations provided in part VIII (except section 248) of subchapter B (section 241 and following, relating to the deduction for dividends received, etc.) shall not be allowed. " (C) The deduction for dividends paid (as defined in section 561) shall be allowed, but shall be computed without regard to capital gains dividends. " (D) The taxable income shall be computed without regard to section 443(b) (relating to computation of tax on change of annual accounting period). " (E) The net operating loss deduction provided in section 172 shall not be allowed.
^e u«c 248.
^e use sei. 26 USC 443. 26 USC 172.
" (3) CAPITAL GAINS.—
" (A) IMPOSITION OF TAX.—There is hereby imposed for each taxable year in the case of every real estate investment trust a tax of 25 percent of the excess, if any, of the net longterm capital gain over the sum of— " (i) the net short-term capital loss; and "(ii) the deduction for dividends paid (as defined in section 561) determined with reference to capital gains dividends only. "(B)
^6 USC sei.
TREATMENT OF CAPITAL GAIN DIVIDENDS BY SHARE-
HOLDERS.—A capital gain dividend shall be treated by the shareholders or holders of beneficial interests as a gain from the sale or exchange of a capital asset held for more than 6 months. " (C) DEFINITION OF CAPITAL GAIN DIVIDEND.—For purposes
of this part, a capital gain dividend is any dividend, or part thereof, which is designated by the real estate investment trust as a capital gain dividend in a written notice mailed to its shareholders or holders of beneficial interests at any time before the expiration of 30 days after the close of its taxable year. If the aggregate amount so designated with respect to a taxable year of the trust (including capital gain dividends paid after the close of the taxable year described in section 858) is greater than the excess of the net long-term capital gain over the net short-term capital loss of the taxable year, the portion of each distribution which shall be a capital gain dividend shall be only that proportion of the amount so designated which such excess of the net long-term capital gain over the net short-term capital loss bears to the aggregate amount so designated. "(4) Loss ON SALE OR EXCHANGE OF STOCK HEIJ> I ^ S S THAN 31 DAYS.
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